American Medical Association: Reduced competition in health insurance markets in 50% of U.S. states

Overall, 73% of metropolitan areas had a significant absence of health insurer competition and were considered “highly concentrated” based on federal guidelines used to assess market competition.

A new report released by the American Medical Association has disclosed that a lot of patients had fewer choices last year as the levels of competition in health insurance markets in half of states across the U.S dropped significantly.

The report found that half of all U.S. states had commercial health insurance markets that were less competitive in 2017 compared to the previous year.

The report found that in 91% of 380 metropolitan areas studied in 2017, at least one insurer had a commercial market share of 30% or more of the market. In 46% of metropolitan areas, a single insurer’s market share was at least 50%.

On the whole, 73% of metropolitan areas had little or no health insurer competition and were considered “highly concentrated” based on federal guidelines used to assess market competition. Highly concentrated levels are largely the result of consolidation and can make them ripe for payers to exercise market power in a way that can negatively impact patients and healthcare providers, the report said.

“The AMA continues to urge that competition, not consolidation, is the right prescription for health insurance markets,” AMA President Barbara L. McAneny, M.D., said in the announcement.

America’s Health Insurance Plans (AHIP) responded to the report saying individuals do have many choices when it comes to health insurance. “We support competition and choice for consumers—and in fact if you look at consumer choices in the employer, MA [Medicare Advantage], and even individual market this year, there are lots of choices. The role of insurance providers is to negotiate lower prices for consumers. We also sell our product based on a clear value proposition—people buy when we have a great product that covers the services and drugs that people need at a price they can afford. That buying equation and value proposition doesn’t change—and that’s what all plans are incented to deliver," the group said in a statement to Fierce Healthcare.

The AMA had opposed two major insurer consolidations—proposed mergers of Aetna-Humana and Anthem-Cigna, which were blocked by federal judges.

But that hasn't stopped insurance companies from pursuing other mergers. Aetna Wednesday officially became part of CVS Health. The two companies closed a $69 billion deal, finishing off a vertical merger that makes one of the largest healthcare giants even larger.

And reports are that Humana is in discussions with Walgreens to broaden an existing partnership and take equity stakes in one another.

The AMA’s latest snapshot of competition in the health insurance industry provided a state-by-state breakdown. It showed the following:

• The 10 states that experienced the largest decrease in competition levels between 2016 and 2017 were North Dakota, Alaska, Louisiana, Indiana, Utah, North Carolina, Arkansas, Hawaii, Alabama and Mississippi.

• The 10 states with the least competitive commercial health insurance markets were Alabama, Hawaii, Louisiana, Delaware, South Carolina, Michigan, Alaska, Kentucky, Vermont and North Carolina. The report also looked at the states with least competitive HMO, PPO or POS markets.

Anthem continued to dominate in 2017 and was the largest insurer in more metropolitan markets than any other insurer. It was the largest health insurer by market share in 75 out of 380 metropolitan areas that the physician group examined. Health Care Service Corp. was second with a market share lead in 40 out of 380 metropolitan areas, while UnitedHealth Group led in 27 areas.

The AMA said its study is designed to help policymakers and regulators identify markets where mergers may harm patients and the physicians who care for them. The study also helps identify health insurance markets where antitrust enforcers should monitor for post-merger effects.

After studying past merger deals, the AMA is worried that less competition would only increase premiums.